Posted on: February 9, 2024
Opening a Bar Checklist: How to Start a Bar in Texas
Starting a bar of your own is a dream for many Texans who don't feel like they're cut out for the 9-to-5 life, but it's a complicated and sometimes daunting task.
What does it take to open a bar in Texas? Continue reading to find out.
Opening A Bar Checklist
We'll get into the step-by-step details for starting a bar below, but first, let's take a look at the high-level checklist.
What do you need to open a bar? To start, you should:
- Research the market and the competition.
- Write your business plan.
- Set up your business's structure
- Secure funding.
- Choose a business name.
- Choose a location.
- Register your business
- Secure all necessary licenses and permits.
- Purchase equipment, inventory, and operations systems.
- Hire and train employees.
- Advertise for your opening night.
How To Open A Bar
Let's dive into each of the 10 steps to open a bar successfully.
Step 1: Experience in the Hospitality Industry
You don't necessarily need business ownership experience to own a bar, but opening a bar with no experience in the hospitality industry would be very challenging.
The hospitality industry is a very particular beast with thin margins and its own set of challenges. To navigate those obstacles, you're going to need someone on board with extensive first-hand experience, whether that's bottom-up or top-down.
Step 2: Perform a Market Analysis and Competitive Analysis
Successfully starting a bar requires an understanding of both local demand and your competition. One of the first steps you should take is to analyze the market and competition so you can determine if your business is viable and help you select a profitable niche.
Step 3: Formulate a Business Plan
A documented business plan isn't just good practice – it's a required step when you apply for a business license and seek startup funding. It will also help you think things through, including many of the other steps on this opening-a-bar checklist.
Your business plan should include:
- An executive summary
- The concept description
- An analysis of the market and your competitors
- Your products and services
- The management structure and overall system
- A financial analysis, including projections
You can find plenty of business plan templates, even ones geared specifically toward bars. These are a great starting place.
Step 4: Choose Your Business Structure
Liability is a big concern in a business that serves alcohol, so it's important to consider the business structure that's best for you.
Many first-time business owners go for sole proprietorships or partnerships because they're easier to establish, but this leaves you personally vulnerable to lawsuits and debt. To protect yourself, you should consider setting up an LLC or corporation before opening a bar. That limits your personal liability if anything goes wrong.
Step 5: Secure Funding
The costs for starting a bar are huge, and you should expect it to be several years before you break even, much less make a profit. Where is the money coming from in the meantime?
Whether you're securing private capital or applying for a business loan, you'll need your business plan ready first.
Step 6: Choose a Business Name
Sometimes, after you've chosen a niche, it's time to brainstorm business names and check their availability. In other words, make sure it's not already spoken for.
A business name is a big decision. It sets the tone, catches people's attention, and gets you business. Some professionals can help optimize the name, albeit for a hefty price.
Step 7: Secure a Location
The right location can make or break a business. Consider the neighborhood vibe, demographics, accessibility to parking and transportation, nearby competition, and local rent costs.
When you're starting a bar, zoning will also be a huge consideration. You should also think about the existing layout – purchasing a location already set up for the business can save on renovations.
Step 8: Register Your Business and Apply for Licenses and Permits
Starting a bar requires a lot of paperwork.
What licenses do you need to open a bar?
The list below is a starting place for all of the registrations, licenses, permits, and other paperwork you may need before opening a bar. It's not comprehensive, and the exact requirements will vary by city or county, so be sure to do your research.
- Register with the IRS for a federal Employer Identification Number (EIN).
- Register for a Texas EIN number.
- Acquire a Certificate of Insurance (business policy).
- Register your business name (and any DBAs) for state-level protection.
- Consider registering your business name for a trademark with the federal government.
- Register your business structure with the Texas Secretary of State.
- Register for a business license (i.e., tax certificate) with the city or county.
- Get sales tax permits at the state and local level.
- Get city or county permits for any construction or renovation you intend to undertake.
- Acquire a Certificate of Occupancy (after meeting all zoning and inspection requirements).
- Secure the necessary liquor license(s) from the Texas Alcohol Beverage Commission (TABC).
- Get a federal alcohol seller's permit(s) from the Alcohol and Tobacco Tax and Trade Bureau (TTB).
- Acquire liquor liability insurance.
- Get a license from the Texas Music Office to play recorded music legally. Live music requires a separate license.
- If you're selling food:
- Consider registering a website domain for your business.
Step 9: Equipment, Operations, and Inventory
Here's the fun part – it's time to fill your bar with all the stuff you need to get things running. This typically includes:
- Liquor/beer/wine/mixer inventory
- Inventory system, point of sale system, and associated hardware
- Tap system, dishwasher, ice bins, blenders, mixers, and other bar equipment
- Bottle display and storage furniture
- Tables and seating
- Glassware, silverware, and flatware
- Sound system
- Cleaning and bathroom supplies
- Entertainment equipment, if needed (pool tables, karaoke machines, etc.)
- Food inventory and equipment, if needed
Step 10: Hire and Train Employees
Your new bar is only as good as its staff. You'll want to hire excellent and experienced managers, bartenders, barbacks, and cooks/food service staff if you're going that route.
Put in enough training to be a well-oiled machine on opening night.
For Texas, in particular, there are a few types of compliance training that are important.
The Texas Alcohol Beverage Commission (TABC) has a compliance training program that can reduce your liability in the event of any illegal sales. It's voluntary, but the benefits are well worth setting the requirement that all alcohol servers become TABC Certified and renew before their certification expires.
If you're opening a bar that serves food, then Texas food handler training is also a must. It's legally mandatory for food-handling businesses in Texas.
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